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Retirement & Equity Release

Can you release equity during retirement? Find out here.

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No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: December 9, 2021

Is retirement equity release an option?

Many pensioners find that as the cost of living increases, pensions and saving rates often fail to provide the returns that they need to get by.

Over the last few years, an increasing number of retirees have contacted us and asked us if equity release as is a viable way to raise funds. Of course, equity release can help, but it’s a big commitment, and not to be taken on lightly.

Want to find out about how equity release could help you in your retirement?

Just contact one of the advisors we work with for a friendly, no-obligation chat. They’ll help you find out more about equity release in retirement and if it’s right for you.

How can equity release help pensioners and those entering retirement?

Equity release for pensioners is a way to supplement income and open up the kind of opportunities that a large lump sum or income stream can provide. Some retirees see it as an alternative to other forms of borrowing – for example; equity release often incurs less interest than credit cards.

What do people use retirement equity release for?

You can use retirement equity release in many ways.

Here are just a few examples:

  • To enjoy retirement without having to downsize and sell your home
  • To increase your general quality of life by having more spending money
  • To pay off other outstanding debts, including credit cards and mortgages
  • To help your family – for example, gifting house deposits, paying off student debts
  • To fund renovations and housing projects – such as garden or home renovations
  • To fund holidays or new pursuits
  • To pay for home care or the costs of moving into a care home

Of course, these are just some of the things that people use equity release for.

What are the other benefits of retirement equity release?

It’s easy to access: As many equity release retirement schemes don’t require repayments, your credit history is not such a factor – making equity release arrangements easier to get than some of the alternatives.

And with ‘drawdown’ type schemes, you can choose to withdraw only as much as you need – only paying interest on what you’ve taken out.

Other benefits are:

  • It’s tax free:
    Releasing equity incurs interest, but it doesn’t incur tax.
    There are no repayments: You don’t have to make any repayments unless you want to.
  • You keep the home:
    And stay as long as you need it. The home is only sold when you pass on, or you move into care.
  • You can control how much you pass on:
    To a certain extent, you can control how much is passed to your heirs. The ‘no negative equity guarantee’ ensures that your next of kind never inherit any debts from your home. You can also ‘ring-fence’ a part of your estate, ensuring that whatever happens – you’ll always have something to pass on.
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What are the disadvantages of equity release?

Of course, there are a few cons to using equity release – which we’ve outlined below.

The interest on the loan

The main downside of equity release funding is the cost incurred by the interest on the loan.

As we said, there’s never any danger of you losing your home for as long as you need it but, over time, these costs can compound. You can’t simply leave the house to your beneficiaries. When you pass on, the house has to be sold to pay the debt – what is left goes to your heirs.

It can affect means-tested benefits

Of course, the inevitable question is: “Does equity release affect state pension?”.

The answer is NO as a State Pension is not a benefit. Pension Credit, however is a means-tested benefit so can be affected, but not the basic State Pension.

Will I have to move out of my home if I take retirement equity release?

No. With responsible lenders, you’re guaranteed the ‘right to tenure’ in your home for as long as you need the house – the property is only sold when you die or move into care. As a result, you’re never at any risk of losing your home, but may have less to leave to family when you pass on.

If in doubt, just speak to one of the friendly experts we work with – they can guide you.

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Want to find out if retirement equity release is right for you? We’ll introduce you to the experts.

All the brokers we work with have passed a 12 module training course and:

  • Are bona-fide experts – and are OMA and LIBF Accredited
  • Cover the entire equity release market
  • Have relationships with all of the leading providers

So it’s no wonder that we’re consistently rated 5 stars by our customers on Feefo.

If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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